KAR Global chief executive officer Jim Hallett did not mince words Tuesday when sharing his concerns about the return of in-person auto auction sales with cars running through lanes, urging the industry to take greater responsibility for safety amid COVID-19.
During a sponsored episode of the Auto Remarketing Podcast, Hallett began by expressing his concern and disappointment from “just a personal point of view as a responsible citizen” on how the United States “as a society” has responded to the COVID-19 pandemic.
He called the pandemic the “most difficult circumstance we've ever dealt with in the history of our lives, and certainly over the last hundred years in this country” and something that would previously have been “unfathomable” in the United States.
“When you think about the amount of infections that are continuing to rise and to get worse as we get into the winter weather here; when you think about the amount of deaths that are occurring — people dying — and hospitals that are over capacity in their ICU unit,” Hallett said.
“And yet, as a country, you would think the United States would be leading … in terms of a recovery. And in fact, we're in a very disappointing position, where I believe that we just haven't, in this country … shown the discipline,” he said.
“We have the CDC guidelines. We have the recommendations of our local health authorities. They're asking us to wear masks; we don't want to wear masks — some of us. They're asking us to social distance, and many of us don't respect social distancing,” Hallett added.
“They're asking us not to gather. Not to gather with our families. And you (can) imagine, not to gather for Thanksgiving, not to gather for Christmas. And so, when I look at all that, I feel, as a society, I feel we've been irresponsible. And I think we can do a lot better.”
Hallett then turned to the auto auction industry at large, which he contends has been “irresponsible,” even “reckless” at times, in how sales are being handled amid COVID-19.
Hallett said he finds, “the industry overall is being what I would term as irresponsible. And in some cases, I would say that we're being reckless.
“When you think about all the recommendations that are in place, and we're inviting people to come together in jam-packed crowds, shoulder-to-shoulder, in physical auction lanes, running cars, I think we're putting our employees at risk,” Hallett said. “We're asking our employees to stand in the way of risk, and to be subject to this infection — and possibly death — as a result of doing their job.
"We're putting our customers at risk. And the industry, I think, needs to be more responsible. And it's not because we've made the decision to go digital,” he said, referring to KAR's all-digital approach. “We've gone digital because we've made the decision that it's the way of the future … So, we're going digital regardless of what the recommendations are. We're a digital company.
"But I think overall, I think the industry needs to really think about, 'How do I be more responsible, in terms of how I gather and how I sell vehicles?' And listen, it's not just the big auction chains, but all auctions have the opportunity to sell digital. And all auctions have the responsibility to keep their employees and their customers safe.”
To be clear, KAR has returned to allowing in-lane bidding at its ADESA auctions, though no vehicles run through lanes.
Even prior to COVID, Hallett has advocated for the industry at large to stop running vehicles through auction lanes for safety’s sake, most notably during a speach at the 2019 NAAA Convention.
These days, Hallett said, many of KAR’s dealer customers are choosing to stay home and buy online.
“What we have done is, we do allow dealers to come on our property, to preview vehicles, to look at vehicles, inspect vehicles, 'walk vehicles,' as we say,” Hallett said, referring to what KAR currently allows at its ADESA auctions. “And we will allow dealers to sit in our lanes, socially distanced to bid on cars that are being posted digitally on the screen. And we offer that service at our auctions.
“But I can tell you, we find now that we've gone digital and dealers are getting so much more comfortable with digital, that there's fewer and fewer dealers coming for previews. And there's fewer and fewer dealers that are actually wanting to be in the lane,” Hallett said.
“We find that they're preferring to view the vehicles online, with good condition reports and good images. They're becoming much more familiar with digital technology and it seems to be the way of the future.”
To recap the auction operation moves at KAR, the company announced in mid-March that all ADESA auction locations in the U.S. and Canada would temporarily, but immediately, move to simulcast-only amid the COVID-19 pandemic.
Four days later, KAR would temporarily halt all ADESA physical auction operations, including simulcast, before gradually resuming some simulcast activities beginning in early April.
Auto Remarketing reported in October that operations had been opening up more broadly ever since that time, with all ADESA locations providing ADESA Simulcast and DealerBlock sales, a company spokesperson confirmed, with all locations are also eligible for Simulcast+ sales. Meantime, in-lane bidding was allowed at most facilities, albeit with no vehicles running through the lane.
For more with Hallett, see the podcast recorded Tuesday in the window below:
Auction sales hit a bit of snag in the final full week of August, due in part to the impact of Hurricane Laura.
According to the latest Used Market Update from J.D. Power, there were 73,000 auction sales of vehicles up to 8 years in age for the week ending Sunday (Aug. 30).
That is down from 95,000 the week before (a 23% decline) and the lowest level of auction sales in almost four months, according to the report. The last time auction sales were that low was the week ending May 3, when there were 61,000 sales.
“While significantly lower week-over-week, sales last week were likely disrupted due to Hurricane Laura, which severely impacted Gulf States,” J.D. Power said in its report. “As a result, sales for the week ending August 30 were 28% less than the J.D. Power pre-virus forecast for the period.”
Auction volumes in each of the first three full weeks of the month (those ending Aug. 23, Aug. 16 and Aug. 9) had come in at 95,000 units.
Breaking down the final week of the month by segment, mainstream segment sales were off 20% on average, while premium segment sales fell 34%.
Within the mainstream side, the biggest dip was for SUVs, with a 30% decline on average for midsize and large SUVs, J.D. Power said. The rest of the segments were fairly consistent with the mainstream average.
Meantime, there were mixed results on the premium side, as segments like the large premium car were down by as much as 58%.
In a related analysis, Black Book also spotted a decrease in auction sales volume.
“In the last several weeks, we have seen the wholesale sales volume and sold volume decrease,” the company said in a COVID-19 Market Insights report released on the first day of this month.
“The drops were not uniform across all auctions and platforms.”
Auction sales rates have slowed a bit, too.
In the report, Black Book noted, “For the past two weeks, auctioneers have been finding themselves having to work harder to get the bids up. This past week, more bids were resulting in ifs and no-sales as buyers showed hesitancy in stepping up an additional $300-$400 to meet the sellers’ floors.”
The estimated average weekly sales rate had been north of 60% for 11 consecutive weeks, before dipping slightly to 59% in the final week of August.
Black Book explained why that might have been.
“At the onset of the pandemic, as shelter-in-place orders went into effect, sales rates quickly tumbled into the teens, but rates began climbing each week before stabilizing,” analysts said.
“After weeks of consistently strong sales, much of sellers' best inventory has been sold,” they noted. “As a result, sales rates have started to marginally decline as conditions of units being offered for sale has deteriorated.
“New inventory deliveries have begun to increase in frequency, which is leading buyers to be more selective in their used purchasing.”
America’s Auto Auction St. Louis general manager Todd Ritter says Zach Evans has used his experience to “help build and strengthen the fleet/lease accounts at America’s St. Louis.”
Evans is fleet/lease manager at America’s Auto Auction’s St. Louis auction, and because of his work such as building fleet/lease accounts and meeting the challenges of doing business during the COVID pandemic, America’s has recognized Evans for outstanding performance.
America’s national sales director Tammy Swofford said customers often tell her they appreciate Evans’ work on their behalf at the auction.
“I know I can always rely on him to seek out potential business and to follow through with every account, whether they have five cars or 50 running at the auction,” Swofford said in a news release.
Swofford continued, “He contributes a great deal to make doing business at America’s St. Louis an exemplary experience for all who come through the doors.”
The challenges of doing business during the COVID pandemic boosted opportunities to help educate customers and improve their auction experience, Evans said.
“We weren’t a big internet sale prior to the pandemic, but we’ve turned that around since COVID came along,” Evans said.
Evans continued, “Many of our long-time customers were unfamiliar with buying and selling online, so we took the opportunity to work with them to make the process easier. Growing our internet audience has contributed to our overall strength now that the dealers are back in the lanes. Now we can focus on working with our clients to get more of the inventory that buyers are needing right now, whether they’re buying on the internet or at the auction.”
When Evans came to America’s St. Louis in April 2019, he hit the ground running, said Ritter, who noted Evans’ background in auction operations and his familiarity with the fleet/lease customers and their needs.
“He has taken that experience to help build and strengthen the fleet/lease accounts at America’s St. Louis,” Ritter said.
Evans’ auction career started in 2014 at ADSEA Memphis, working in the check-in department. He moved on to become CR writer and outside coordinator and then e-commerce specialist and account administrator for various fleet/lease accounts.
He was promoted to fleet/lease manager after one year, and he worked in that position until starting with America’s Auto Auction St. Louis last year.
Evans says that his background has helped him succeed in his post at America’s Auto Auction.
“A focus on every customer, regardless of volume or location, is deeply ingrained in the culture at America’s Auto Auction, which is a great fit for me and the way I approach the business,” Evans said.
Evans continued, “As an independent auction, we certainly appreciate the large, nationally-known accounts, but we also know that the smaller, local banks and credit unions are an important part of our market. It’s is great to be part of a company that values every relationship.”
The America’s Team has helped Evans in his work toward building strong customer relationships, with Ritter and Swofford providing strong support, he said.
“That helps me to be a better employee, a better manager, and a better representative of America’s Auto Auction when I meet with the many customers in our area,” Evans said.
Industry recruiting and consulting firm TPC Management helped connect Evans to America’s Auto Auction. TPC works with auto auctions and companies that remarket vehicle portfolios and fleets, helping to identify talent to fill management positions.
America's Auto Auction St. Louis, located in Centreville, Ill., holds a sale every Thursday at 9:30, averaging 1,500 vehicles per week running on 10 lanes. The auction offers full service in-house transportation and complete reconditioning, making its inventory available online via OVE, SmartAuction, Open Lane and Edge Pipeline.
Founded in 2005, America’s Auto Auction operates 23 locations.
DAA Northwest and the McConkey Auction Group are going digital with their annual Rock & Roll Sale.
This year, which is the 25th anniversary of the auction’s signature event, the festivities include a series of simulcast-only sales event and a virtual concert performance from The Cronkites on the roof of DAANW’s auction arena.
Initially, rock band Weezer had been scheduled for the event, but plans were scrapped amid the pandemic.
Instead, the auction is hosting what it is calling “Rock & Roll Week.” The plans include three days (July 22-24) of digital sales events on Edge Simulcast, MAG Motorsports and MAG Now platforms.
The Cronkites, who have opened for the event’s headliners each year since 1998, will hold their digital concert atop the auction arena the evening of July 22.
A YouTube link to the concert will available that day on MAGauctions.com.
“We had already signed Weezer to perform during our 25th Rock & Roll Sale when COVID-19 hit,” MAG president and chief executive Bob McConkey said in a news release. “When Washington State went into lockdown and our auctions were temporarily closed, we anticipated the road ahead would be long.
“We had to adjust to the current reality, recognizing that everything had changed for us,” he said.
Given the uncertainty around COVID-19, the group shifted plans. “The Rock & Roll Sale is our biggest event, and our customers wondered what we were going to do,” said McConkey.
The group said several customers got in touch with McConkey and DAANW general manager David Pendergraft regarding a virtual event.
“We pulled our team together and immediately got creative about delivering a new Rock & Roll Sale experience,” Pendergraft said in the release.
A full schedule of events can be found at MAGauctions.com.
